Which works better $40 Million or $200,000.00
Phoenix Media Group OTC BB:PXMG
Recently purchased a radio station in Seward Alaska. Why Seward Alaska?
If you are going to buy a radio station, the comment goes, why not New York or Los Angeles, why Seward, Alaska? The answers are multiple and important to understand.
To begin with the mega-media companies have been on a buying binge that has driven radio station prices through the roof. It is common these days to see $100 million dollar price tags and often even more for radio stations in major and even not so major markets. This we believe is insane and we anticipate that some if not all of these mega-media companies will be in great difficulty when the next economic slow down begins.
These inflated prices just don't make sense. For example an LA market station, KIEV AM
870, recently sold for $40 million dollars. The greater Los Angeles area has a population of about 14 million people and all in all there are around 88 stations licensed in and around the greater LA area. So if each station had an equal share of the population each station would have an audience of about 159,000 people. Of course we know that stations don't get equal audience shares nor do 100% of the people listen to the radio, so the actual number of audience is less, much less. So some one paid $40 million dollars to reach somewhat less than 159,000 people. PHOENIX MEDIA, on the other hand, paid $200,000 for KSWD AM 950 in Seward, Alaska, a city with a summertime population estimated at more than 250,000 people. Granted the winter population is small, only about 3000 people, but the sunnier population is large and growing and THEY ARE THE ONLY STATION IN TOWN. Now which do you think is the better deal, KIEV AM 870 in Los Angeles for $40 million, or owning KSWD AM 950 in Seward, Alaska for $200,000.00?
Seward, Alaska also happens to be one of the fastest growing resort towns on America's Pacific coast. In 1998 one hundred ten deluxe cruise ships were scheduled to dock in Seward. Dozens more smaller cruise ships also visit Seward annually and it is home to scores of deluxe sport fishing boats, tour boats and luxury pleasure craft. In May of 1998 the $56 million Sea Life Center opened in Seward, clearly a major commitment to Seward's continuing growth as a major resort community. Seward is located amidst breath taking natural beauty, often called "Switzerland By The Sea" it is attracting an ever expanding number of visitors each year and, Phoenix Media Group, Ltd., owns the ONLY RADIO STATION IN TOWN. That is why Seward, Alaska.
The stock has been sleeping for the past year, and it has suddenly come alive.
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